Wednesday, November 1, 2006

John Perkins: Confessions of an Economic Hit Man. & Greg Palast: The Best Democracy Money Can Buy.

An economic hit man or EHM is a person who works for a bank or international finance house. Their job is to organise loans to developing countries, to help with infrastructure projects such as power plants, roads or airports. But it is a condition of these loans that companies from the country doing the lending have to undertake the building. The money, therefore, simply moves from a bank to an engineering company. But the recipient country of course has to pay it all back, with interest. If it defaults, the lending country can impose controls such as installing military bases or gaining access to raw materials.

John Perkins worked as an EHM for an American company called Chas. T. Main, but he eventually realised the effects his work was having and so he got out. His book recounts his experiences and how he came to see through what he was doing, and so gives an interesting insider's account of how US control over the Third World is established and maintained. Ecuador, for instance, was loaned billions of dollars, but in thirty years its official poverty level grew to 70 percent and its public debt to $16billion. Nearly half of its national budget is devoted just to paying off its debts.

Saudi Arabia was brought under US influence, partly to ensure there would be no repetition of the 1973-4 oil embargo. The Saudi rulers used their petrodollars to buy US government securities, and the interest on these paid US companies to build infrastructure projects, which were then operated by cheap labour imported form other Middle Eastern or Islamic countries. But on Perkins' account, Saddam Hussein refused to play the EHM game, thus bringing the wrath of the US down on him. He further claims that Venezuela was saved from invasion simply because the US could not take on that country as well as Iraq and Afghanistan at the same time.

The back cover of Confessions has a laudatory quote from Greg Palast, whose own book (first published in 2002) is a wide-ranging look at the links between government and big business. He quotes an IMF report from 2000 which reviewed the impact of globalisation and concluded that "in the recent decades, nearly one-fifth of the world population has regressed".

One of Palast's particular concern is privatisation, which he claims has led to huge profits for some and worsening services for the many. Another is shared with Perkins, that of how the Third World is controlled and kept in a subordinate position by the most powerful capitalist companies. In 2001, for instance, Argentina was subjected to IMF-imposed austerity measures that led to soaring unemployment and a dramatic fall-off in industrial production. In 1998 Brazil was loaned billions of dollars and at the same time forced to sell its power companies: British Gas bought the Sao Paulo Gas Company for a song. New Labour, with Blair and Mandelson leading the way, were instrumental in helping US and UK companies get their hands on Brazilian companies and raw materials. The fate of Allende in Chile, overthrown by a CIA coup, was sealed because he refused to pay compensation to American companies whose property he had expropriated.

Palast also has a forceful chapter on how George W Bush supposedly stole the 2000 presidential election. He's also good on the emptiness of Blair's Labour, which is driven by ambition rather than any convictions. But it's the picture of how corporations (what Perkins calls the corporatocracy) go about the work of making over the world in their own image that is conveyed memorably by both these volumes.

Paul Bennett

For more information on the Socialist Standard, click on the image below:

Japan has a new Prime Minister who seems eager to foster nationalism. We look at his policies for furthering the interests of the Japanese capitalism.

Koizumi's five and a half year reign as Prime Minister came to a voluntary end in September. He tossed the keys to the official residence to his protege Shinzo Abe after a summer farewell tour that included a pilgrimage to Graceland and a visit to Yasukuni Shrine to pay his respects to the war criminals and their cannon fodder said to spiritually reside there. On September 20, Abe ('ah-bay') was elected President of the Liberal Democratic Party, and six days later the Upper and Lower houses of the Diet approved him as Prime Minister. This quick and easy process, free of public participation and the unpleasant prying from clenched fingers etcetera, must have an envious Gordon Brown shaking his head in disbelief.

Born to rule
A third-generation politician, like so many others in the LDP, Abe has long regarded the top governmental post as his birthright. His grandfather Nobusuke Kishi became Prime Minister in 1957, culminating an amazing political comeback after having served a three-year prison sentence as a 'class-A' war criminal for his wartime role as Minister of Commerce and Industry. The US occupational authorities let Kishi off the hook, enlisting his aid in the fight against commies, but the Japanese people were less forgiving and finally drove him from office in 1960 through massive protests against the US-Japan Security Treaty. Kishi's son-in-law Shintaro Abe, father of Shinzo, was expected to become Prime Minister himself one day. In the early 1980s he rose as high as Foreign Minister, but a corruption scandal and terminal cancer brought his political career to an end.

Shinzo Abe's own political career got started in 1982, when his father suddenly ordered him to quit his job at Kobe Steel and become his executive assistant at the Ministry for Foreign Affairs. In 1993 Abe was elected, in typical LDP fashion, to the same Diet seat his father had held until his death two years earlier. It soon became clear that Abe would become Prime Minister one day, and this became an absolute certainty in 2005 when Koizumi appointed him Chief Cabinet Secretary, after he had been the Deputy Chief Cabinet secretary since the Mori administration.

Koizumi helped Abe tremendously by appointing him to head the negotiations with North Korea to return Japanese citizens abducted in the late seventies and early eighties, along with their families. Being at the centre of this highly publicized issue, which has become the cause celebre of the rightwing in Japan, has brought Abe great public recognition. He has pointed to his own hard-line stance towards negotiations with North Korea as an example of how he is a 'fighting politician.' In his book Utsukushii kuni he (Towards a Beautiful Country), published in July, he defines this term as a politician who 'will act without fear of criticism if it is for the good of the nation and its people.' Abe points to the abduction issue as an example of his fighting skills, suggesting that it took great courage on his part to lead this struggle: 'Many Diet members told me that I had their support, but only a few of them actually took action with me. It's a shame that there were so few 'fighting politicians,' but that's always the way it is in any era.' Here Abe is laying it on a bit thick, as if it took great courage to latch on to an issue that already had strong public support and media backing.

A hard act to follow
One problem for Abe in his tough-guy role, it must be said, is that he comes across as exactly what he is: a third-generation LDP politician who has obediently followed the path to power his family laid out for him. Indeed, his bland life and career probably account for the need to fancy himself a fighting politician in the first place. Abe is not that different from fellow dauphin George W. Bush, who tries to pass himself off as a Texan and prefers the title Commander in Chief to that of President. Unfortunately for Abe, he lacks Koizumi's acting skills. Even though Koizumi is yet another third-generation politician, and a dyed-in-the-wool reactionary at that, he managed to present himself as a rebel within the LDP ranks. He lent his empty statements the air of profundity by delivering them in a scratchy Clint Eastwood voice, with the appropriate pauses inserted to heighten the dramatic impact. Abe, by contrast, speaks in a nasal monotone, without Koizumi's sense of timing. Granted, such superficialities should be irrelevant, but in the demagogic world of bourgeois politics this stuff does matter. The ability of Koizumi to survive for five and a half years was due in no small part to his charisma, whereas his oafish predecessor Yoshiro Mori only lasted a year.

The Japanese public was hoodwinked by Koizumi's vow to either reform the LDP or smash it up in the process. Either option sounded great to most people, and he enjoyed tremendous support as a result. Repeating the magic word kaikaku (reform) on every occasion, Koizumi created the impression that he would revitalise the country. The great thing about the word, as far as he was concerned, is that it could mean different things to different people. To capitalists it clearly suggested his desire to shrink the welfare state, cut corporate taxes, and deregulate the labour market, whereas to anyone not happy with the status quo it seemed that Koizumi was going to attack the entrenched power structure of big capitalists and corrupt bureaucrats. For his LDP colleagues, meanwhile the empty slogan of 'structural reform' seemed just the ticket to prolong their own hold on power.

After starting off at around 80 percent, Koizumi's approval rating did slump a number of times, but thanks to an economic upturn and that magic word of his, he always managed to get back on track around election time. His greatest success was the 2005 general election, which he framed as a simple referendum on his plan to privatise the postal service. By purging the LDP of several members who had opposed this plan, Koizumi made it seem that he was finally carrying through on his promise to shake up the party. The public, if anything, was opposed to privatisation, but the image of Koizumi standing up to 'vested interests' within the LDP looked good, and this manoeuvre handed the party a landslide victory.

White House as a model
Abe will be hard-pressed to match the corny but compelling drama of his predecessor, whose term in office is now referred to as 'Koizumi gekijo' (theatre), but he may not have to rely on his own poor acting skills. First of all, Abe will face less opposition within his own party thanks to Koizumi having diminished the power of the various LDP factions, which have long functioned as nearly independent political parties. In this sense, Koizumi has made good on his promise to change the LDP, although concentrating power in the hands of the party leader was not exactly what most peoplehad in mind.

At the same time, Abe is seeking to gather more power for the position of Prime Minister, with the US White House as his model. Along with appointing Cabinet members, Abe introduced the new position of 'Advisor to the Prime Minster' for the following five areas: national security, economy and fiscal policy, educational revitalisation, public relations, and the abduction issue. This may be an effort to circumvent the ministerial bureaucracies to better assert his own personal power, in the manner of Nixon or Bush Jr. If this is his intention, there is no guarantee of success, and the secretary-general of the LDP's Upper House caucus has already warned that this will 'cause disarray over policy-making and split the administration in two.' What is clear, at any rate, is that Abe is keen to gather more dictatorial powers for the Prime Minister than have existed in the past.

The point I wish to make is that despite Abe's questionable skills as a politician, he may survive longer than expected because of the power he possesses and will likely expand if the confrontation with North Korea escalates (as seems likely now that a nuclear weapon has been tested there). If nothing else, Bush's disastrous term in office has shown that an inarticulate and incompetent politician can remain in power given a united party, impotent opposition, and a situation to terrify the public with, and Abe has all of these factors in his favour along with the sort of strong media backing that Bush has enjoyed.

Abe's policies
Assuming that Abe does stick around longer than Mori, what policies does he wish to implement? In many respects, his policies carry on where Koizumi left off. Both claim to champion 'small government,' while being strong believers in the power of the state when it comes to promoting nationalism. For Abe small government above all means reducing the number of government workers and cutting people's health-care and pension benefits. To soften the blow, he promises to retrain workers so as to give them a 'second-chance' in life. One difference in economic policy compared to the previous government is that Abe is making less noise about the need to eliminate unnecessary public works or carry out financial restructuring. His line is that such reforms are impossible without economic growth, and he looks to corporate tax cuts to spur this growth.

Abe's economic policies are not likely to be popular, but he has pinned his hopes on the magical power of nationalism to deflect public frustration. Abe and his LDP cohorts have long claimed that Japan is 'abnormal' because its people lack patriotism. They pin much of the blame for this on the 'pacifist' Constitution and postwar educational system, emphasizing that both were imposed on Japan by the US. Over the past decade, the LDP has been waging a campaign to steadily blast away at both of these pillars.

Abe hopes to preside over a revision of the Constitution, ridding it of Article Nine, which pledges to 'forever renounce the threat or use of force as a means of settling international disputes.' Last year the LDP issued a draft Constitution, and the following sentence from the Preamble reflects its overall tone and content: 'The Japanese people share a duty to support and defend the nation and society they belong to with love, a sense of responsibility, and mettle.' The changes to the Constitution are ominous, but in some respects the LDP is merely bringing the words into line with reality. The existence of Article Nine did not stop Koizumi from dispatching troops to Iraq (although it did necessitate some verbal gymnastics on his part to argue the action was not unconstitutional). The Left, for its part, merely defends the current 'pacifist' Constitution, instead of seeking the fundamental societal change needed to eliminate the necessity of war. This weak position, which effectively defends the status quo while lacking a clear goal, makes it easy for Abe's LDP to appear principled and realistic by comparison. If the LDP does succeed in changing the Constitution, however, it will have removed a handy fig leaf that conceals the reality of the Japanese state.

The same desire to turn back the clock and dispense with democratic rhetoric can be seen in Abe's goals for educational reform. He intends to advance the effort already under way to introduce new history textbooks that cut out unpleasant facts. Abe and the LDP consider it 'masochistic' to teach students about crimes committed by the state, preferring an account of history that builds up their national pride. Abe has also strongly supported the government effort to force students and teachers to sing the national anthem at school ceremonies and display the national flag.

A dilemma for Abe in championing the rightwing campaign for nationalism, however, is that it has already heightened friction with Japan's supposed ally South Korea and main trading partner China. The influential corporate lobbying group Keidanren called on Koizumi to stop visiting the controversial Yasukuni Shrine in order to improve diplomatic relations. In his first month in office Abe did visit China and South Korea, in an attempt to patch things up, but he seems unlikely to stray too far from his far-right allies. Abe has nationalists to thank for his quick rise to power, and nationalism is the best card he has to hold on to his own position and keep the LDP (and the capitalist class) in power.